New York City has been knocked down many times in its day, and it's always managed to recover. But the coronavirus pandemic has really done a number on the city, and now, investors fear a prolonged downturn could spell serious losses.
An exceptionally harsh blow
When the coronavirus pandemic first hit home, New York City was declared it epicenter. During those first scary weeks in March and April, hospitals were so overwhelmed that Central Park was utilized as a makeshift healthcare facility, and ad hoc morgues started popping all over the city.
The city's caseload eventually died down to a manageable level, and hospitals started freeing up space. But the economic impact of the pandemic hasn't improved. More than 1 million New York City residents were unemployed as of late October, and local businesses have been sluggish. In the past few months alone, retail chains have abandoned the city, landmark hotels have closed their doors, apartment sales have slumped, and landlords have gotten so desperate to fill vacancies that they're pretty much giving rent away for free.
The worst part: The city could be in for a very long recovery. Moody's Analytics predicts the current economic crisis will plague New York City well into 2025. By contrast, the firm expects the rest of the country to recover two years prior. And it's that lag investors need to brace for.
How New York City will dig out of its slump
Right now is a pretty scary time to be a real estate investor in New York City. The good news, however, is that once the pandemic comes to an end and travel becomes a safe, viable option, there's a good chance the city will experience a tourism surge that helps it dig itself out of its current hole.
Currently, Broadway is shuttered, events are canceled, and the general appeal of visiting New York City just isn't there. Once things improve on the coronavirus front, investors should expect an uptick in tourism that helps a number of industries that are currently struggling, from hotels to retailers to restaurants.
The appeal of living in New York City should also resume once the pandemic ends. Right now, nobody wants to pay a premium for a shoebox-sized apartment when everyone's working remotely and the once-simple act of going out to eat is a dangerous prospect. But when nightlife and dining open back up and employers start calling their staff back to the office, demand for rentals in the city could spike.
The Millionacres bottom line
While New York City's real estate investors may have a long, tough road ahead, the city is poised to not only recover eventually, but boom. And investors with room in their portfolios may want to look to discounted opportunities in the near term. Buying a building, or even an apartment, at a discount today could pay serious dividends when New York City is restored to its former glory and the money starts rolling in.